We get it. Consistency is hard.

But what if you could achieve a goal with minimal effort? Turns out, there’s a way.

Recurring contributions (automatic investments) is an easier way to save for college. It allows you to set up automatic payments to remove some of the stress of saving, often with less hassle than doing it manually.

Whether you’re a lapsed saver (meaning you didn’t contribute beyond the first 3 years of account ownership) or you’ve just been less-than-disciplined about saving, jump-starting your contributions can make a potentially big difference in the long run. One of the easiest ways to get back on track is by setting up recurring contributions.

3 benefits to making saving automatic

The recurring contributions approach consistently keeps you on track—and consistency is key when saving over time. A valuable tool for parents saving for college, automatic investment plans (AIPs) increase potential return, reduce risk, and can help you avoid missing out on tax breaks.

Here are 3 key benefits:

  1. Discipline. It’s one thing to decide to save money in a 529 account. It’s quite another to actually do it. Automatic investments can eliminate the temptation to spend that money elsewhere.
  2. Convenience. We’re all busy with schedules jam-packed with tasks and activities. Why not take something off your to-do list? Recurring contributions let you automate college saving.
  3. Better results. Consistent savers may get better outcomes than those who try to invest large sums all at once.* Here’s how they stack up: 
• Lapsed savers. Among investors who haven’t made any 529 contributions beyond the first 3 years of owning the account, few are enrolled in AIPs. This group had an average of $10,825 saved.
• Inconsistent savers. These are account owners who save less frequently than once a year. They have an average lifetime contribution of $19,745.
• Consistent savers. More than 60% of regular savers have set up recurring contributions. They’ve saved an average of $23,566.

Ready to invest? Follow these 5 steps:

If you’re convinced of the benefits of recurring contributions, it’s easy to get started:

  1. Log on to vanguard.com and select your Individual 529 College Savings Account.
  2. Under the name of your 529 account, select Go to my 529 plan account area from the menu.
  3. Select Contribute in the right hand menu.
  4. Select Electronically from your bank account and the student account.
  5. Enter the amount, frequency of your contributions, and start date.

Instead of pledging to hit the gym more this year, make a resolution you know you’ll actually keep: Take advantage of an AIP. It’s like having someone lift you off the couch and put you on a treadmill. Except an AIP can potentially pay bigger dividends than losing a few pounds.

*Source: Vanguard, 2017. 529 Plan Savers Earn Better Grades for Behavior.


Notes:

All investing is subject to risk, including the possible loss of the money you invest.

For more information about any 529 college savings plan, contact the plan provider to obtain a Program Description, which includes investment objectives, risks, charges, expenses, and other information; read and consider it carefully before investing. If you are not a taxpayer of the state offering the plan, consider before investing whether your or the designated beneficiary’s home state offers any state tax or other benefits that are only available for investments in such state’s qualified tuition program. 
Vanguard Marketing Corporation serves as distributor and underwriter for some 529 plans.